DMBM405040 - Interest: Interest Review Unit (IRU): General principles: Delay in applying for and pursuing an interest charge

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Where a charge to interest is overlooked and then made later, or payment asked for after a period of time, a customer's dissatisfaction is understandable. However,  the delay in asking for payment of the interest has no effect on why the charge was made in the first place. The interest charge has come about through circumstances happening in the period between the relevant date and the payment of the tax and is lawfully due regardless of what has happened since.

The delay in asking for payment does not increase the amount of interest payable because HMRC do not charge interest on interest. Despite any delay, the customer is not normally put at a monetary disadvantage by being asked to pay at a later date. The customer is not asked to pay more at the later date than was due at the earlier date. So the interest charge should be upheld.

One reason for challenging an interest charge may be that the 'statute of limitations' applies and more than six years delay has occurred and HMRC cannot now charge the interest. This statute does not apply to tax and interest, so this challenge should not be accepted.